July 27th, 2006:

By Carola Hoyos in London

Published: July 27 2006 07:59 | Last updated: July 27 2006 19:08

Royal Dutch Shell, Europe’s second largest listed energy group, on Thursday reported profits had surged, but prompted concern by announcing it would go ahead with a major Qatari project even though costs had trebled.

The company said it had given the green light to its venture to turn natural gas into cleaner-burning auto fuel. But the gas-to-liquids (GTL) venture will now cost around $12bn, compared to the $4bn the company had anticipated when it first mooted the plan in October 2003. read more

Extract: Shell said it had booked a provision of $500 million, an amount it would be ready to pay to end a securities class action. It added that no settlement has been reached.

THE ARTICLE

By BENOIT FAUCON
July 27, 2006

LONDON — Royal Dutch Shell PLC Thursday posted a 40% rise in net profit for the second quarter as soaring oil prices more than offset barrels lost from unrest in Nigeria and a $500 million provision for class actions.

The world’s fourth-largest publicly traded oil and gas company by market capitalization posted a net profit of $7.32 billion, or $1.13 per share, for the three months ended June 30, compared to $5.24 billion, or 78 cents a share, for the same period last year. read more

EXTRACT: Shell said its second-quarter profit jumped to $7.32 billion, or $1.13 a share, from $5.24 billion, or 78 cents a share, a year earlier. It said rising oil prices more than offset barrels lost from unrest in Nigeria and a $500 million provision for lawsuits related to Shell’s reserves restatements.

THE ARTICLE

By JEFFREY BALL and BENOIT FAUCON
July 27, 2006 4:50 p.m.

Exxon Mobil Corp., the world’s biggest publicly traded oil company by market value, reported its second-highest quarterly profit ever, a result likely to intensify political anger at Big Oil at a time when consumers in some parts of the country are paying more than $3 a gallon for gasoline during the height of the summer-driving season. read more

LONDON (AFX) – Royal Dutch Shell PLC repeatedly evaded persistent merger rumours involving the Anglo-Dutch oil giant and some of the world’s supermajors like BP PLC and France’s Total SA.

During press conferences held in London today, chief executive Jeroen van der Veer took the safe side and always replied ‘no comment’ whenever the issue was raised.

He dismissed it as pure ‘speculation’, thus not meriting any response from the group.

Shell has been the subject of a string of takeover rumours following the oil reserves scandal two years ago. read more

By Upstream staff

Shell Canada aims to produce 50,000 barrels of tar-like bitumen a day from its steam-driven oil sands operations over the next two years, helped by its C$2.4 billion ($2.1 billion) takeover of BlackRock Ventures, it said today.

Following the buy up, Shell Canada estimates its “in situ” oil sands reserves at 25 billion barrels. In situ oil sands are produced in wells with the aid of steam, instead of being mined.

The long-term potential production from those assets is 150,000 barrels a day, Shell Canada said, Reuters reported. read more

EXTRACTS FROM SHELL 2nd QUARTER 2006 RESULTS

In connection with the putative shareholder class actions filed in the United States District Court for the District of New Jersey relating to the 2004 recategorisation of certain hydrocarbon reserves, Shell has determined that it would be prepared to resolve that litigation for, among other terms, a payment by Shell of $500 million. Accordingly, management of the Shell Group has established a $500 million provision in respect of this litigation. No settlement has been reached in the matter (see note 10). The provision is included in the Corporate segment. read more

July 27 (Bloomberg) — Royal Dutch Shell Plc, Europe’s second-biggest oil company, said it will make fuels from Qatari natural gas in a project that may cost as much as $18 billion, triple earlier estimates.

The project, known as Pearl GTL, will cost $4 to $6 per barrel of oil equivalent to produce, The Hague-based Shell said today in a statement. The venture is expected to produce the equivalent of 3 billion barrels of oil during its lifetime, the company said in a separate statement.

Oil and gas project costs are climbing amid shortages of equipment, labor and raw materials such as steel. A year ago, Shell said costs for its Sakhalin II venture in Russia’s Far East doubled to $20 billion. Shell today cut its 2006 output target. read more

Thu Jul 27, 2006 2:22 PM GMT
 
By Stuart Penson

LONDON (Reuters) – Royal Dutch Shell on Thursday launched the world’s biggest gas-to-liquids (GTL) project in Qatar that will convert gas from the Gulf State’s vast North Field into clean fuels for the world market.

Shell said it expected the Pearl project — which confirms the Anglo-Dutch company’s position as leading player in the emerging GTL sector — to start around the end of the decade, with a second unit to follow within a year. read more

EXTRACT: Shell also announced it is “determined and prepared” to resolve the US litigation “for, among other terms, a payment by Shell of 500 mln usd.” It has made provisions for the payment, although it pointed out that no agreement has been reached with the plaintiffs.

The accounting error in the reserves led to the departure of key executives at Shell, including chairman Philip Watts, and a far-reaching revamp that led to the historic union of the UK and Dutch parent companies of the group. read more

We recently became aware from Shell insiders of a treasure trove of Shell internal emails from a senior Shell manager, “Hans” Bouman, widely circulated as collector items because of their outspoken and eloquent content, often on controversial subjects.

This is another one, this time to Walter van De Vijver, the Group Managing Director of the Royal Dutch Shell Group forced to resign as a result of the reserves scandal. The email in which Bouman expressed serious reservations about policy was also copied to Tom Botts and Kieron McFadyen, among others. read more

EXTRACT: Excluding non-operational gains and losses, including a $500 million charge for litigation related to Shell’s overstatement of its reserves, the result was $6.546 billion.

THE ARTICLE

Thu Jul 27, 2006 8:35 AM BST

By Tom Bergin

LONDON (Reuters) – Royal Dutch Shell beat forecasts on Thursday with a 36 percent rise in second-quarter profits, boosting its shares, as high oil prices more than compensated for disappointing production news.

Investors were also cheered by Shell’s reaffirmation that it was sticking to its 2006 and 2007 spending plans, despite rampant sector cost inflation. read more

By Upstream staff

Surging oil prices have pushed Shell’s current cost of supply net profit for the second quarter of the year to $6.3 billion, a 36% rise year-on-year.

Current cost of net supply profits strips out changes in inventory value.

Excluding a non-operational charge of $232 million, the result was $6.546 billion, up from an underlying net profit of $5.171 billion booked in the same period in 2005.

The company’s production slipped year-on.year, averaging 3.25 million barrels of oil equivalent per day in the second quarter, compared with 3.52 million boepd in the same period last year. read more

We believe (but await confirmation) that the half a billion dollars set aside by Shell for settlement of a class action lawsuit is almost certainly in respect of the litigation covered in the following report published by us in March.